WEBVTT - Bloomberg Surveillance TV: March 19th, 2026 0:00:02.360 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.840 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:36.080 Terminal and the Bloomberg Business app. 0:00:36.280 --> 0:00:39.040 And the Savannas. This morning, the FED Chair stay and put. 0:00:40.960 --> 0:00:43.599 If my successor is not confirmed by the end of 0:00:43.680 --> 0:00:46.199 my term as chair, I would serve as chair pro 0:00:46.320 --> 0:00:49.120 tem until he is confirmed. I have no intention of 0:00:49.200 --> 0:00:52.360 leaving the board until the investigation is well and truly over, 0:00:52.720 --> 0:00:55.640 with transparency and finality. On the question of whether I 0:00:55.680 --> 0:00:58.080 will then continue to serve as a governor after my 0:00:58.240 --> 0:01:01.400 term ends and after the investigation or I have not 0:01:01.560 --> 0:01:02.680 made that decision yet. 0:01:02.880 --> 0:01:03.720 So here's the latest. 0:01:03.760 --> 0:01:06.120 This morning, the FED Chair Jay Powell, vowing to stay 0:01:06.120 --> 0:01:09.440 on at the Central Bank until the DOJ investigation into 0:01:09.480 --> 0:01:11.959 him comes to an end. Joining us now to Viscasis 0:01:12.000 --> 0:01:15.039 Kristna of Evercorn now Christa welcome. First of all, we've 0:01:15.080 --> 0:01:16.759 asked this question a number of times in the last 0:01:16.760 --> 0:01:19.200 twenty four hours. I'd love your perspective on it. Does 0:01:19.240 --> 0:01:22.760 that provide consistency or invite controversy? 0:01:23.560 --> 0:01:28.000 I think Powell has made explicit something that I think 0:01:28.280 --> 0:01:31.119 was very clear to anyone who knew him. There is 0:01:31.319 --> 0:01:35.760 simply no way that he would even consider leaving the 0:01:35.840 --> 0:01:40.480 FED under the cloud of this investigation, not really because 0:01:40.520 --> 0:01:43.120 of what it means for him, but because of the 0:01:43.160 --> 0:01:47.280 precedent that it would create that a future FED official, 0:01:47.440 --> 0:01:51.120 even FED chair, could be, on the face of it, 0:01:51.480 --> 0:01:54.120 driven out or at least helped to the door by 0:01:54.160 --> 0:01:56.040 a DOJ investigation. 0:01:57.360 --> 0:02:01.080 This line here, though, I think, is this interesting. The 0:02:01.120 --> 0:02:03.640 first line from the chairman was that if my successor 0:02:03.680 --> 0:02:05.840 is not confirmed by the end of my term as chair, 0:02:05.880 --> 0:02:09.760 I'll stay on. That makes sense, that's continuity. Market wants 0:02:09.760 --> 0:02:11.720 to see that. The second line was I have no 0:02:11.760 --> 0:02:14.120 intention of leaving the board until the investigation is well 0:02:14.160 --> 0:02:18.239 and truly over with transparency and finality. So ultimately a 0:02:18.280 --> 0:02:21.919 lot of people will view that as defending central bank independence. Granted, 0:02:22.240 --> 0:02:24.239 the third point is interesting though, and this is the 0:02:24.280 --> 0:02:25.760 bit where I'm intrigued. 0:02:25.840 --> 0:02:27.720 Krishner this line. At the moment on the. 0:02:27.720 --> 0:02:29.680 Question of whether I will continue to serve as a 0:02:29.720 --> 0:02:32.480 governor after my term ends and after the investigation is over, 0:02:32.560 --> 0:02:35.600 I have not made the decision on that yet. What's 0:02:35.639 --> 0:02:37.399 the value of putting that out there? 0:02:38.840 --> 0:02:41.640 Well, I think you're absolutely right that that was a 0:02:41.760 --> 0:02:46.760 very strong statement by Powell. And as you'll recall, it 0:02:46.840 --> 0:02:50.120 wasn't something he was forced to say because of questioning. 0:02:50.440 --> 0:02:53.600 It's something he volunteered. He had it written down, he 0:02:53.680 --> 0:02:57.520 knew he wanted to say that. Look, there's a sort 0:02:57.560 --> 0:02:59.680 of narrow sense in which we can interpret that in 0:02:59.680 --> 0:03:04.080 a why sense. The narrow sense is that Powell doesn't 0:03:04.120 --> 0:03:07.320 want to look like he's offering a deal. If you 0:03:07.440 --> 0:03:11.440 drop the investigation, I walk right, that's almost as bad 0:03:11.720 --> 0:03:15.640 as looking like you're being hounded out by the investigation itself. 0:03:16.120 --> 0:03:18.399 So there's a narrow way in which we might interpret 0:03:18.440 --> 0:03:21.400 that language. But I'm inclined to read it also in 0:03:21.440 --> 0:03:24.520 a broader way. The Powell is telling us that he 0:03:24.639 --> 0:03:28.360 is seriously considering staying on as a governor, as a 0:03:28.400 --> 0:03:31.520 regular governor, at least for some time after the end 0:03:31.520 --> 0:03:35.840 of his term as chair, even if that investigation is dropped. 0:03:36.000 --> 0:03:38.800 That is not something I would have really brought into 0:03:39.400 --> 0:03:43.200 a few months ago. But I think the DOJ investigation 0:03:43.280 --> 0:03:47.360 has backfired terribly on the administration, and I think that 0:03:47.480 --> 0:03:51.960 it feels like Powell is inclined to stay possibly either 0:03:51.960 --> 0:03:52.960 way at this juncture. 0:03:53.360 --> 0:03:55.640 I'm struck by the historical parallel, and we were talking 0:03:55.640 --> 0:03:58.120 about this yesterday. The last person who is FED chair 0:03:58.160 --> 0:04:01.000 who then stayed on as governor was Baroner Eccles. His 0:04:01.120 --> 0:04:03.160 term ended as FED chair in nineteen forty eight, and 0:04:03.200 --> 0:04:05.080 he stayed on for a number of years after that. 0:04:05.360 --> 0:04:07.840 This is following the Breton Woods Accord, It followed the war, 0:04:07.960 --> 0:04:11.560 It followed a highly tumultuous period in central banking history. 0:04:11.960 --> 0:04:14.720 Are we marking another period which is sort of setting 0:04:14.720 --> 0:04:17.320 off a new era for central banks where they have 0:04:17.400 --> 0:04:20.440 less power or frankly, they don't necessarily drive the bus, 0:04:20.440 --> 0:04:23.520 where Generation Q, as Michael Hartner just said, is over. 0:04:24.520 --> 0:04:28.520 Well, certainly, you know the note we published on the 0:04:28.560 --> 0:04:32.760 FED meeting yesterday said specifically what you've just mentioned that, Look, 0:04:32.839 --> 0:04:36.560 this was actually in the circumstance is a pretty dubvish 0:04:36.880 --> 0:04:41.520 FED meeting, and it came with bullish upgrades to growth forecast. 0:04:41.720 --> 0:04:45.200 But we wrote the FED is not driving the bus. Now, 0:04:45.520 --> 0:04:49.040 that's in the specific context of a war, and a 0:04:49.040 --> 0:04:52.720 war that generates a very large shock to energy prices. 0:04:53.360 --> 0:04:56.400 I'd be wary of making a generalized statement with central 0:04:56.400 --> 0:04:59.200 banks don't matter anymore. I think that would be and 0:04:59.200 --> 0:05:01.080 I'm not saying you're say that, but that would be 0:05:01.800 --> 0:05:04.880 far too sweeping. But certainly in the here and now, 0:05:05.240 --> 0:05:08.200 this is a context where the central banks are to 0:05:08.279 --> 0:05:11.240 a very large degree in reactive mode. They are not 0:05:11.400 --> 0:05:15.200 setting the agenda, They are not shaping where we are going. 0:05:15.760 --> 0:05:18.680 Does it feel to Powell potentially like this is a 0:05:18.720 --> 0:05:21.800 complex moment, both in terms of the world and in 0:05:21.880 --> 0:05:26.200 terms of the Fed's institutional situation, where it may be 0:05:26.240 --> 0:05:28.640 advisable for him to stay for a while. I guess 0:05:28.720 --> 0:05:32.039 that's certainly something that you know he will be considering here. 0:05:32.279 --> 0:05:34.000 One question I think is whether it would be a 0:05:34.040 --> 0:05:38.200 disaster for Chair Wash if Powell stayed on. Not clear 0:05:38.240 --> 0:05:41.480 to me that's the case. I'm not sure they're particularly close, 0:05:41.520 --> 0:05:46.120 to say the least, But Powell is underlying pretty dubvish 0:05:46.320 --> 0:05:49.320 and there are versions of the world where Powell staying 0:05:49.320 --> 0:05:53.960 on as a regular governor could ultimately help bridge to 0:05:54.080 --> 0:05:57.360 getting one or two cuts done later this year. 0:05:57.520 --> 0:06:00.800 Underwash, just real quick, here as the bar right now 0:06:00.839 --> 0:06:02.080 for the FED to hike rate at. 0:06:01.960 --> 0:06:07.320 Some point, Well, the term some point obviously is elastic, right, 0:06:07.640 --> 0:06:11.040 But I think the bar to the FED hiking rates, 0:06:11.360 --> 0:06:14.320 let's say this year, I think is incredibly high. It's 0:06:14.360 --> 0:06:19.120 not literally impossibly high, but I think it's very, very high. 0:06:19.520 --> 0:06:22.880 You know, look, we have an economy that faces growth 0:06:22.880 --> 0:06:26.599 as well as inflation risks, but one where you know, 0:06:26.600 --> 0:06:30.400 in the baseline case, both growth and core inflation in 0:06:30.440 --> 0:06:35.960 the US ought to be relatively relatively resilient, as in 0:06:36.160 --> 0:06:40.320 limited effect compared with the other economies in the rest 0:06:40.320 --> 0:06:43.159 of the world. So it's not obvious that this juncture 0:06:43.200 --> 0:06:46.960 a major shift in the direction of policy is appropriate. 0:06:47.000 --> 0:06:50.919 The market obviously has been pushing back and shaving FED 0:06:51.000 --> 0:06:54.120 rate cuts. That seems like the vector that is in 0:06:54.200 --> 0:06:57.320 play at the moment. I tell you, we still think 0:06:58.080 --> 0:07:01.120 that it's possible to get to a couple of cuts 0:07:01.160 --> 0:07:04.120 this year, under Chair War. So our take is more 0:07:04.160 --> 0:07:08.000 dubvish than the market right now would think that all 0:07:08.040 --> 0:07:11.680 fared signals yesterday, they're still inclined to cuts the one 0:07:12.040 --> 0:07:15.200 rather than two. And the question is could the data 0:07:15.520 --> 0:07:19.400 plus the new chair potentially certainly lock in that one 0:07:19.480 --> 0:07:20.680 and maybe get them to two. 0:07:21.400 --> 0:07:22.040 Stay with us. 0:07:22.360 --> 0:07:34.440 More Bloomberg surveillance coming up after this. So here's the 0:07:34.520 --> 0:07:37.239 lisis this morning energy price is soaring as President Trump 0:07:37.240 --> 0:07:40.120 looks the curb attacks on infrastructure in the Middle East, 0:07:40.160 --> 0:07:42.920 claiming the US knew nothing. These ready strike on the 0:07:42.960 --> 0:07:45.880 critical South Pass gas field in Iran. This is what 0:07:46.000 --> 0:07:48.400 Edward Fishman of the Council on Foreign Relations has to 0:07:48.400 --> 0:07:50.880 say rise the following Iran his waging war on the 0:07:50.920 --> 0:07:54.360 global economy. Its strategy is clear, keep the stratiformers effectively 0:07:54.400 --> 0:07:57.440 closed until prices rise enough to force President Trump to 0:07:57.520 --> 0:07:59.800 back down. The author of choke Points American Power in 0:07:59.840 --> 0:08:02.360 the Age of Economic Wolfat joins us now for more 0:08:02.400 --> 0:08:03.080 Atie good Monk. 0:08:03.200 --> 0:08:03.800 Good to see John. 0:08:03.840 --> 0:08:05.880 That's sounds some books. Let's talk about the significance of 0:08:05.880 --> 0:08:08.520 this chuck point. He's got control of this Iran. 0:08:08.720 --> 0:08:10.800 I think that's the one thing we've learned is that 0:08:10.840 --> 0:08:14.080 Iran has established very clear control over the straight off 0:08:14.080 --> 0:08:16.840 hor moves and there's very little that the United States 0:08:16.880 --> 0:08:20.280 can do without committing ground forces to stop that. Trump 0:08:20.440 --> 0:08:23.880 entered the war assuming that Iran would not close the strait. 0:08:23.920 --> 0:08:25.200 Because the theory. 0:08:25.000 --> 0:08:26.800 Was that they would have to put thousands of sea 0:08:26.840 --> 0:08:28.680 mines in the strait to close it. And if they 0:08:28.680 --> 0:08:31.160 did that, what would happen? Iran would not be able 0:08:31.160 --> 0:08:34.199 to sell its own oil, so it would be economically suicidal. Well, 0:08:34.240 --> 0:08:36.640 Iran has kind of created a new kind of economic 0:08:36.679 --> 0:08:40.120 warfare with just using cheap drones that cost you ten 0:08:40.120 --> 0:08:43.480 thousand dollars a pop and only hitting about a dozen ships. 0:08:43.520 --> 0:08:45.400 Right, they haven't hit that many ships. 0:08:45.600 --> 0:08:49.040 They've changed the risk calculus of the entire entire shipping industry, 0:08:49.240 --> 0:08:51.600 and so they've really created this very low cost way 0:08:51.600 --> 0:08:53.600 of disrupting shipping and we don't have a great answer 0:08:53.600 --> 0:08:53.840 for it. 0:08:53.840 --> 0:08:55.280 I'm glad you brought up the costs because these are 0:08:55.280 --> 0:08:57.560 howdie drones are ten to twenty thousand dollars to produce. 0:08:57.720 --> 0:09:00.720 How many is Iran right now have in stock. Because 0:09:00.760 --> 0:09:03.960 how cheap they are to produce, means they could potentially 0:09:04.040 --> 0:09:06.640 prolong this war for as long as possible. 0:09:06.760 --> 0:09:09.040 I think that they could prolong as war as long 0:09:09.080 --> 0:09:11.400 as they want. If it's if we're talking about producing 0:09:11.520 --> 0:09:14.520 and using low cost drones, they've got tens of thousands 0:09:14.520 --> 0:09:16.520 of them. But I think more to the point, the 0:09:16.600 --> 0:09:19.120 room we're sitting in right now is bigger than you 0:09:19.120 --> 0:09:21.120 would need to actually produce to headrones. 0:09:21.360 --> 0:09:22.640 And Iran is a huge country. 0:09:22.640 --> 0:09:24.839 I think it's the fifteenth or sixteenth largest country in 0:09:24.880 --> 0:09:27.240 the world. So even in a scenario in which we've 0:09:27.240 --> 0:09:30.199 got air strikes for the next year and destroy every 0:09:30.240 --> 0:09:32.800 single thing in the country that looks like a military target, 0:09:32.920 --> 0:09:34.600 we're not going to be able to stop them from 0:09:34.600 --> 0:09:35.480 producing drones. 0:09:35.880 --> 0:09:38.960 Members of Iran's parliament right now are debating potentially making 0:09:39.000 --> 0:09:41.960 it basically like we have on our transit system, you 0:09:42.000 --> 0:09:44.240 have to pay a fee in order to get through 0:09:44.240 --> 0:09:46.960 the Strait of Hermose. So basically, is the United States 0:09:46.960 --> 0:09:51.040 at some point seating all control of this international waterway 0:09:51.160 --> 0:09:51.800 to the regime? 0:09:52.080 --> 0:09:55.960 Yeah, I mean, look, one of the core factors underlying 0:09:55.960 --> 0:09:58.439 American hegemony for decades has been that the United States 0:09:58.440 --> 0:10:01.439 provides open sea lanes. What Iran has shown now is 0:10:01.480 --> 0:10:03.960 that they actually control the Strait of Horn Moves. And 0:10:04.040 --> 0:10:06.600 even if this war were to end without regime change. 0:10:06.640 --> 0:10:09.960 So if this war ends and Iran's decimated militarily, but 0:10:10.000 --> 0:10:13.600 you still have the IRGC in control, Iran still controls 0:10:13.640 --> 0:10:16.720 the Strait of Horror Moves. And to your point, Anne Marie, 0:10:16.720 --> 0:10:20.679 I mean, it's quite remarkable Iran negotiating bilaterally with not 0:10:20.720 --> 0:10:22.960 only the Indians and the Turks and the Chinese, but 0:10:23.040 --> 0:10:25.560 the French and the Italians. You know, US allies about 0:10:25.600 --> 0:10:28.120 creating kind of like a TSA pre check line to 0:10:28.160 --> 0:10:30.240 get through the Strait of Horror Moves. I mean, talk 0:10:30.280 --> 0:10:33.680 about leverage. It's quite remarkable and not honestly anything I 0:10:33.679 --> 0:10:35.439 would have expected going into this conflict. 0:10:35.480 --> 0:10:38.280 You said, it's hard to see out unless US, the 0:10:38.400 --> 0:10:41.040 US makes real concessions, or the US ends boots in 0:10:41.080 --> 0:10:43.600 the ground. What would boots in the ground look like? 0:10:43.840 --> 0:10:46.240 Sure, I think this is a really important point, because 0:10:46.400 --> 0:10:48.680 I do really think there's a binary right here. There's 0:10:48.720 --> 0:10:51.360 sort of two ways to reopen the strait. One is 0:10:51.520 --> 0:10:54.040 you cut a deal with the Iranians in which you're 0:10:54.080 --> 0:10:57.720 making painful concessions, probably leaving almost certainly leaving the regime 0:10:57.760 --> 0:10:59.720 in power. But beyond that, maybe drawing down some US 0:10:59.760 --> 0:11:02.800 four in the region, maybe providing some security guarantees to 0:11:02.840 --> 0:11:04.880 Iran in the form of Russian or Chinese boots on 0:11:04.920 --> 0:11:07.080 the ground, a kind of trip wire in Iran the 0:11:07.080 --> 0:11:11.640 way that the United States has in NATO countries. I 0:11:11.640 --> 0:11:13.360 think if you were to put boots on the ground, 0:11:13.400 --> 0:11:14.679 what would you need to do If the goal is 0:11:14.720 --> 0:11:17.360 reopening the strait? You need two things. One, you need 0:11:17.480 --> 0:11:19.720 naval patrols in the straight over moves. The US Navy 0:11:19.720 --> 0:11:22.040 has not wanted to do this because we could lose 0:11:22.080 --> 0:11:26.080 these exquisite, exquisite warships just by short range missiles or drones. 0:11:26.240 --> 0:11:29.880 But two, we would also need to occupy quite a 0:11:29.920 --> 0:11:32.040 lot of the coastal part of Iran in the Persian 0:11:32.040 --> 0:11:34.800 Gulf to get enough of a buffer zone so that 0:11:34.840 --> 0:11:36.560 it's out of range of the drones. To the point 0:11:36.559 --> 0:11:38.480 we made before, they're going to have drones, so we 0:11:38.520 --> 0:11:41.239 need to actually build a very big buffer zone to prevent. 0:11:41.000 --> 0:11:42.280 Them from using them against ships. 0:11:42.320 --> 0:11:44.320 How much of a tipping point is this in terms 0:11:44.360 --> 0:11:47.400 of the Middle East power as a financial center, as 0:11:47.440 --> 0:11:49.560 a place that's been attracting a lot of money, as 0:11:49.600 --> 0:11:52.280 sort of a new growth area that everyone wants to 0:11:52.280 --> 0:11:53.560 get into, at least until now. 0:11:54.080 --> 0:11:55.280 You know, I think this is one of the more 0:11:55.320 --> 0:11:57.680 tragic elements of this war, because I think in the 0:11:57.720 --> 0:12:01.360 last few years golf countries have made really substantial strides 0:12:01.400 --> 0:12:02.720 to diversify away. 0:12:02.480 --> 0:12:04.040 From just being commodities producers. 0:12:04.320 --> 0:12:08.240 We've seen the UAE Saudi really invest in the future economy, 0:12:08.280 --> 0:12:12.280 becoming sort of hubs for data infrastructure AI et cetera. Well, 0:12:12.280 --> 0:12:14.520 guess what we've now seen for the first time in 0:12:14.559 --> 0:12:18.720 wartime a handful of data AWS data centers struck by Iran. 0:12:19.280 --> 0:12:21.559 And the real question I think that will come out 0:12:21.600 --> 0:12:25.199 of this is, even if there is some stability, will 0:12:25.480 --> 0:12:29.439 investors feel confident putting these really important AI data centers 0:12:29.480 --> 0:12:30.080 in the Middle East? 0:12:30.280 --> 0:12:31.760 I'm not so sure. And then for the. 0:12:31.760 --> 0:12:33.599 Perspective of the golf countries, they're going to have a 0:12:33.640 --> 0:12:36.360 big reconstruction bill. I mean, all these investors who come 0:12:36.400 --> 0:12:38.600 on your show, who are they going to for LPs. 0:12:38.679 --> 0:12:41.680 It's the sovereign wealth funds of these golf countries. They're 0:12:41.679 --> 0:12:43.240 not going to have as much money, I think, to 0:12:43.880 --> 0:12:46.960 splurge on Western private equity funds if they're needing to 0:12:47.000 --> 0:12:51.959 invest in rebuilding. The Rosla fund natural gas facility in cutter. 0:12:51.840 --> 0:12:54.839 Had a funal question forty seconds round, a speculation will 0:12:54.840 --> 0:12:56.960 be forgating in the future. Because this is a super 0:12:56.960 --> 0:12:59.160 fluid situation. How do you think this sends? 0:13:00.400 --> 0:13:01.600 Well, please do forgive me. 0:13:01.960 --> 0:13:06.319 I do think that it's likelier that Trump escalates than 0:13:06.360 --> 0:13:07.120 that he caves. 0:13:07.600 --> 0:13:08.920 So I've always. 0:13:08.640 --> 0:13:12.240 Been skeptical that Taco applies in this scenario. Taco in 0:13:12.240 --> 0:13:15.480 a trade war, Trump can utilaterally suspend tariffs, and no 0:13:15.480 --> 0:13:16.520 one's all the wiser. 0:13:16.520 --> 0:13:19.040 Everyone says, Okay, well, you know we won in this. 0:13:19.480 --> 0:13:22.520 If Trump backs down militarily, he has to walk away 0:13:22.559 --> 0:13:25.360 with his tail between his legs, and we never know 0:13:25.440 --> 0:13:28.240 if Iron actually will even allow ships to go through 0:13:28.240 --> 0:13:29.000 the straight erformance. 0:13:29.520 --> 0:13:30.199 Stay with us. 0:13:30.520 --> 0:13:43.079 More Bloomberg surveillance coming up after this take squeeze in 0:13:43.160 --> 0:13:46.319 gas prices, particularly in Europe. Brent the big move overnight, 0:13:46.360 --> 0:13:49.760 of course, rising close to one twenty as around remps 0:13:49.800 --> 0:13:52.679 up attacks on energy infrastructure in the Middle East. Samantha 0:13:52.720 --> 0:13:55.120 down of Goldman Sax rights in the following. The developments 0:13:55.200 --> 0:13:58.439 underscore upside risk to our price forecasts from longer Holmers 0:13:58.440 --> 0:14:04.040 disruptions and persist damage to energy production even after Homer's reopens. 0:14:04.200 --> 0:14:05.960 Sam joined US now for more, Sam, good morning, get 0:14:05.960 --> 0:14:08.480 to see you. Let's start where we kicked off this 0:14:08.520 --> 0:14:12.040 program this morning, Brent at one point fifteen, WTI at 0:14:12.120 --> 0:14:15.000 nineta and a spread starting to open up even more. 0:14:15.000 --> 0:14:15.880 What do you think it speaks to? 0:14:16.600 --> 0:14:19.160 So I think the market is pricing in this probability 0:14:19.160 --> 0:14:22.800 that maybe the US government will restrict exports, and if 0:14:22.840 --> 0:14:25.600 you're not exporting TI to the rest of the world, 0:14:26.000 --> 0:14:29.400 then you have a bigger oversupply within the US. So 0:14:29.720 --> 0:14:32.080 the WTI prices would stay on the low end and 0:14:32.120 --> 0:14:35.200 sort of disconnect from international prices. 0:14:35.280 --> 0:14:37.360 Can we explore that a little bit further? What would 0:14:37.360 --> 0:14:40.400 happen if they actually introduce that policy. 0:14:41.080 --> 0:14:44.360 So if you're blocking exports, I think the main risk, 0:14:44.440 --> 0:14:48.560 for example, especially product experts that everybody's talking about, the 0:14:48.720 --> 0:14:51.680 main risk is that the refineries in the Golf Coast 0:14:51.960 --> 0:14:54.920 will lose those high margins they are seeing in the 0:14:54.960 --> 0:14:57.400 market right now, and they may choose, Okay, I don't 0:14:57.440 --> 0:14:59.320 have the same incentive to produce that I did just 0:14:59.360 --> 0:15:03.760 a minute ago. I might reduce my production. So it's 0:15:03.840 --> 0:15:06.880 not obvious what the net impact will be in terms 0:15:06.880 --> 0:15:10.440 of product prices to the rest of the US. Also, 0:15:10.560 --> 0:15:13.840 because we don't know if other countries might retaliate at 0:15:13.880 --> 0:15:17.040 the moment. If you look at the northeast of the US, 0:15:17.360 --> 0:15:19.840 it has to net import products, same thing with the 0:15:19.840 --> 0:15:24.160 West coast that and Marie mentioned earlier. So it's not 0:15:24.640 --> 0:15:29.240 that easy to balance everything. Even on the crude side. Yes, 0:15:29.320 --> 0:15:31.600 the US produces a lot of light crude, but we 0:15:31.720 --> 0:15:33.880 import a lot of heavy crude. A lot of our 0:15:33.920 --> 0:15:37.520 refineries are set up to run a heavier type of crude. 0:15:37.680 --> 0:15:41.040 So what if other countries retaliate on exporting that to 0:15:41.200 --> 0:15:45.000 the US. So it's not an obvious answer. It can 0:15:45.120 --> 0:15:48.880 lower the WTI prices, it can potentially even lower product 0:15:48.920 --> 0:15:52.640 prices for the rest of the country, but we don't 0:15:52.680 --> 0:15:55.680 know what other ramifications might be. And when we saw 0:15:55.720 --> 0:15:58.520 that in the past, we saw the oil industry lobby 0:15:58.640 --> 0:16:01.520 against those types of manas. So I am curious to 0:16:01.560 --> 0:16:03.560 see where those conversations end today. 0:16:03.680 --> 0:16:05.840 Are you saying that you think the market's wrong, that 0:16:05.880 --> 0:16:08.080 you think that this gap has to close one way 0:16:08.160 --> 0:16:12.480 or another, potentially with WTI coming up to meet Brent Krude. 0:16:12.880 --> 0:16:16.360 No, I think with these conversations happening, the market is 0:16:16.440 --> 0:16:19.280 just trying to price a probability that they go ahead 0:16:19.280 --> 0:16:21.840 with it, and I think because of the sharp spike 0:16:22.080 --> 0:16:25.560 in prices that we've seen so far, it almost puts 0:16:25.560 --> 0:16:28.840 everything on the table and in the hopes that, Okay, 0:16:28.920 --> 0:16:30.680 we produce a lot of oil, we produce a lot 0:16:30.680 --> 0:16:33.760 of products, maybe we can pull this off. So I 0:16:33.800 --> 0:16:36.760 think it's correct to price in a probability that happens. 0:16:36.840 --> 0:16:40.080 I just don't know if the outcome will be. 0:16:40.040 --> 0:16:40.960 The desired one. 0:16:41.200 --> 0:16:44.240 Are you surprised that the market, the paper market isn't 0:16:44.280 --> 0:16:46.440 reacting more strongly to what a lot of people are 0:16:46.440 --> 0:16:48.400 saying is a real shift that we saw yesterday. We're 0:16:48.440 --> 0:16:52.560 suddenly gas facilities came under attack, Suddenly oil facilities came 0:16:52.640 --> 0:16:56.160 under attack, both suffering damages that could potentially take them 0:16:56.200 --> 0:16:59.080 offline for a longer period of time. Are you surprised 0:16:59.360 --> 0:17:01.880 that there is an even bigger reaction, not only in 0:17:01.960 --> 0:17:05.840 current futures, but also three months, six months, twelve months out. 0:17:06.320 --> 0:17:07.600 Yes, I am. 0:17:08.119 --> 0:17:12.360 What we've seen is that your Middle East price rows 0:17:12.440 --> 0:17:14.119 up the most, and that makes sense, that's where the 0:17:14.119 --> 0:17:18.240 shock is. And when you look at Brent, not quite 0:17:18.400 --> 0:17:21.040 as much. You still see a big differential, and even 0:17:21.040 --> 0:17:24.560 in the Middle East, when you look at their physical prices, 0:17:24.600 --> 0:17:28.200 they are even higher than their financial prices. So it's 0:17:28.200 --> 0:17:31.240 almost like the market is saying, maybe this can still 0:17:31.280 --> 0:17:34.040 be a short lived event. So you price the most 0:17:34.280 --> 0:17:38.679 your physical local market, then second you price your local 0:17:38.920 --> 0:17:42.280 financial market, and third you price the financial markets elsewhere. 0:17:43.080 --> 0:17:45.800 When this is not a given today that is going 0:17:45.840 --> 0:17:48.080 to be short lived. In fact, the escalation that we 0:17:48.119 --> 0:17:52.560 saw over the past few hours would I think suggest 0:17:52.560 --> 0:17:55.200 an increased risk that this goes on for a little 0:17:55.200 --> 0:17:58.440 bit longer. So yes, I am surprised, and I would 0:17:58.480 --> 0:18:01.440 expect the longer this goes, the more those financial prices 0:18:01.520 --> 0:18:05.280 will embed those risks in it and will go higher. 0:18:05.320 --> 0:18:06.520 I'm glad you bring up this point. 0:18:06.640 --> 0:18:08.760 The essential closure straight of her moose is short lived 0:18:09.119 --> 0:18:12.320 because that can reopen if there's a day hunt actually 0:18:12.400 --> 0:18:16.680 hitting energy infrastructure and long term damage as already long term. 0:18:16.720 --> 0:18:18.840 How long for this all to be rebuilt and the 0:18:18.840 --> 0:18:21.840 supply chains to get back to normal when actually the 0:18:21.920 --> 0:18:23.560 product itself is getting hit. 0:18:24.280 --> 0:18:26.320 That is a key point. I like to say that 0:18:26.359 --> 0:18:30.119 there are two variables first to watch in all this confusion. 0:18:30.440 --> 0:18:33.520 One is how much volume is out of the market, 0:18:33.720 --> 0:18:37.359 and that hasn't really changed because you're hitting infrastructure that 0:18:37.560 --> 0:18:40.960 wasn't really sending product or oil or gas through the 0:18:41.000 --> 0:18:44.320 strait to begin with. So you're not changing today what's 0:18:44.359 --> 0:18:47.040 coming out of the market. But the second variable to 0:18:47.080 --> 0:18:50.600 watch is how long this lasts. And the strait of 0:18:50.640 --> 0:18:52.919 her moose, to your point, is just one part of 0:18:52.960 --> 0:18:56.360 that answer. The second part is, well, if you're desjoying infrastructure, 0:18:56.600 --> 0:18:58.760 this may take longer to fix. 0:18:59.119 --> 0:19:01.200 This might not be a four. 0:19:00.960 --> 0:19:04.600 Week run up of operations in a refinery that you 0:19:04.920 --> 0:19:07.600 chose to shut down. This might take longer. It might 0:19:07.600 --> 0:19:10.320 take a few months if you have extensive damage in 0:19:10.359 --> 0:19:13.560 some of that infrastructure. So that second variable, the risk 0:19:13.640 --> 0:19:16.919 of how long the disruption lasts. You're essentially making that 0:19:17.080 --> 0:19:20.720 risk higher. The more infrastructure gets hit, the higher the 0:19:20.840 --> 0:19:23.080 risk that disruptions last longer. 0:19:23.240 --> 0:19:25.800 As we look ahead to Jdvan's vice president staying down 0:19:25.800 --> 0:19:28.080 with oil executives, the United States is not a monolith. 0:19:28.359 --> 0:19:30.600 If we have an export band control, what does this 0:19:30.720 --> 0:19:32.919 do for the West Coast that are so relyingt on 0:19:33.000 --> 0:19:34.480 Asian imports for their products. 0:19:34.600 --> 0:19:37.320 Yeah, and it's difficult to move, so you produce a 0:19:37.320 --> 0:19:39.440 lot of those products in the Golf Coast and it's 0:19:39.440 --> 0:19:41.879 difficult to move to the west coast in particular because 0:19:41.920 --> 0:19:44.280 you're not going to have enough pipeline capacity to do it, 0:19:44.480 --> 0:19:46.359 so you have to ship it around and it's not 0:19:46.440 --> 0:19:49.520 quite as easy as shipping to the east coast, so 0:19:50.080 --> 0:19:55.440 it'll be a bit clunky, not without friction, which means 0:19:55.480 --> 0:19:57.399 prices can still stay higher. 0:19:57.119 --> 0:19:58.119 For a little bit longer. 0:19:58.240 --> 0:20:01.240 We've seen big knaves and cred big amazing gas prices. 0:20:01.320 --> 0:20:03.720 Have you started to see anything happen in acts in 0:20:03.760 --> 0:20:05.560 self commodities off the back of. 0:20:05.480 --> 0:20:08.520 This, we're definitely getting a lot of questions on it, 0:20:08.600 --> 0:20:13.959